David Chow Kam Fai (pictured in a file photo), a former Macau legislator and founder of Hong Kong-listed casino services firm Macau Legend Development Ltd, says it is “necessary” to “strengthen the supervision of the concessionaires” in the Macau casino market.
In an opinion article in local media, Mr Chow added that proposals made by the Macau government for the revision of the legal framework of the city’s casino industry – including pre-vetting by the government regarding operator shareholder dividends, and government-appointed delegates to provide oversight of Macau operators – were “indispensable”.
The Macau government has said the local gaming law must be revised prior to the expiry in June next year of the city’s six casino concessions.
Mr Chow wrote in his opinion piece: “Independent third parties … must be introduced to comprehensively evaluate the loan, financing and cash flow ratios of the concessionaires every year and issue reports accordingly.”
He added: “Such measures aim to prove that the concessionaires have healthy cash flow so as to safeguard their daily operations and [local] employment.”
Mr Chow is a member of the National Committee of the Chinese People’s Political Consultative Conference, an advisory body to the Chinese government. He remains an executive director of Macau Legend, following a change of control of the firm last year.
Macau Legend runs a number of casinos inside Macau hotels, via so-called service agreements with an existing Macau gaming concessionaire, SJM Holdings Ltd. The group also has an investment in the Macau Fisherman’s Wharf complex on Macau peninsula, and controls a casino resort in Laos.
The entrepreneur said in the opinion piece, he was against reducing the number of casino concessionaires in Macau, “especially in the current situation of economic slowdown,” which could lead to a “lack of competition”.
With regard to the Macau government’s wish to see the city’s gaming operators investing further in non-gaming projects, Mr Chow suggested such effort should focus on two things.
They were, “projects that can promote the moderate diversification of Macau’s economy,” a reference to a particular policy aspiration of Macau, and projects that create “complementary advantages” for local small and medium-sized enterprises.
A Tuesday note from JP Morgan Securities (Asia Pacific) Ltd offered some commentary on Macau’s 45-day consultation process regarding the proposed gaming law revisions.
The brokerage observed that a government official at Monday’s final public session of the process, had mentioned that the proposed introduction of a government representative at the gaming concessionaires, would in the words of the official “not affect the business operations”. The official also mentioned the precedent of the delegate system being used for other public concessions, such as public utilities.
Analysts DS Kim, Amanda Cheng, and Livy Lyu, wrote: “The official also explained the proposed dividend restriction (i.e., pre-approval requirement) is to ‘make sure operators can use their profits to promote the economic diversification of Macau’.” Though the analysts added this was said “without further elaboration”.
The JP Morgan team further noted: “The very fact that officials are trying to reassure public on these key concerns could indicate the government is approaching this process in a fair and reasonable way, we think – or hope – although the visibility on final outcome still remains low.”
The government has up to 180 days from the end of the public consultation on October 29, to issue its summary of the findings. Once the report is completed and a revised bill is approved by the city’s Legislative Assembly, a public tender process should then take place, according to the local authorities.
“While it’s not impossible to finish all this before the expiry (June 2022), we do think it’s a very tight schedule and we wouldn’t be surprised if the government extends the current term by six to 12 months,” said the JP Morgan team in Monday’s note.
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